In October 2011, CMS approved the state's plan to reduce certain Medi-Cal payments by 10% (California Healthline, 12/14/12). The state Department of Health Care Services has estimated that the cut will save the state $431 million (Modern Physician, 1/17).

According to DHCS, the cut would apply to:

A number of providers and outpatient services, including clinics, dentists, laboratories, optometrists and pharmacists; and

Freestanding nursing and adult subacute care facilities, as well asÂ other nursing facilities.

Payment reductions would be retroactive to June 1, 2011.

In January 2012, U.S. District Court Judge Christina Snyder tentatively blocked the cut, saying it could cause irreparable harm to patients.

In December 2012, a three-judge panel of the 9th Circuit Court of Appeals overturned the decision, ruling that HHS Secretary Kathleen Sebelius has authority to decide whether California and other states can reduce Medicaid rates while still adhering to program regulations.

Criticisms of Cut

Critics of the cut say that California already provides one of the lowest Medicaid reimbursement rates in the U.S.

They argue that the cut could make it harder for patients to find physicians willing to accept Medi-Cal beneficiaries after the program expands enrollment under the Affordable Care Act (California Healthline, 12/14/12).

Steve Green -- president of the California Academy of Family Physicians -- said, "The way Medi-Cal pays, there is no room for a 10% cut -- practices are either not making anything or losing money," adding, "I think people need to realize there's a difference between saying a patient's insured and them actually having access to care."

Opponents Plan Appeal

Jan Emerson-Shea -- spokesperson for the California Hospital Association, which filed a lawsuit opposing the reduction -- said that CHA will continue to oppose the 10% cut in court.

According to Emerson-Shea, CHA will file an appeal for the cut to be reviewed by the entire appeals court instead of a three-judge panel.

She said, "We're looking at months, if not years, of litigation -- this is a long way from being resolved" (Modern Physician, 1/17).